Church Loan Funds - Expectation Versus Reality - Griffin Church Loans

Church Loan Funds – Expectation Versus Reality

Church Loan Funds

Church repair, construction, and renovations are events that people look forward to completing.

It brings the entire congregation together and spreads a festive feeling that fills the air with joy and spiritual blessings.

However, while church construction is a matter of celebration, church loan funds and related serious issues do not bring much joy, do they?

Church funding is a serious matter which requires thorough consideration and investment of time and energy.

Not to forget the lengthy negotiations, draining paperwork, and heated conflicts.

Moreover, what is more pressing, is the difference between our expectations and reality

Churches do not regularly borrow money. Therefore, it is nearly impossible for a church to understand the entire process before it begins. But that does not mean the church stays unprepared and considers a loan with false expectations.

The plan that a church begins with is usually different from the plan the church finally decides to put in place. It is both natural and normal.

Our guide will prepare you for everything you need to know before you sign papers for funding for church projects.

Without any delay, let us dive into what to expect when acquiring church loan funds and how to align your expectations with reality.

Church Loan Funds – Expectation Versus Reality

Expectation 1: Purpose

Typically, churches have a coherent idea of the purpose of the loan.

It could be church funding for church construction and expansion, repair, renovation, or even decoration.

Therefore, an expectation is cemented from the beginning that we will take a particular amount of loan for a specific purpose.


However, that is rarely the case.

For instance, as construction begins, unexpected costs will arise.

On the other hand, some structures might need additional construction or reinforcement during regular repair and renovation.

Thus, before choosing any church loan funds, the church administration must be prepared for unforeseen changes in the cost of construction.

This change depends on how old the church is and how dilapidated or well-built the church’s structure is.

In any case, it is essential to conduct a thorough assessment of the church to be better prepared. Additionally, there should be some flexibility in cost planning.

Expectation 2: Market Interest Rates Are Important

Church administration is aware of the importance of church mortgage loans. It considers market interest rates when approaching different church leaders.

Churches expect only the market rate to be crucial and only consider that in their cost planning and scheduling.


Market rates are the essential indicator of banks’ lending to churches. But they are not the only numbers you need to understand.

Expectations of future interest rate, interbank exchange rate, and the other charges are essential too.

Long-term church mortgage loans tend to increase the loan’s interest rate but provide a stable loan payment for the church. On the other hand, short-term loans are cheaper but often require the church to refinance more often.

Since most church construction loans are for the long term, one must assess the costs not just today but over a more extended period.

Expectation 3: Funds Requirements Will Remain the Same

The church administration starts to believe that once funds are guaranteed, cash flow will be steady.


While churches have pure intentions, it is only natural that some fine details might get overlooked.

First, cash flow is relatively good; it is not always steady.

Church construction loans disbursements are usually released in installments. Hence, it is possible that the church lenders sometimes delay an installment payment if the construction project is not meeting the proper benchmarks.

During the construction period, costs often increase.

When there is work in progress around the lodges, pastors might require temporary relocation.

Whether the temporary shift is renting a space such as a hotel or a banquet facility, these will increase the church’s expenses, and so on.

Ultimately, we recommend factoring in these minor charges, too, as it helps pay back the loan sooner and on time.

Expectation 4: An Empathetic Lender

Not long ago, Lenders were perceived as cruel and greedy. Their demeanor and greed for money were signposts that made the borrowers cautious.

In current times, however, lenders’ behavior has seemingly changed as many banks and loan providers want to act as your partner in the project and act as though they care about the church and the project at hand. Some churches might even be convinced that their lender has their best interest at heart.


Banks rarely do have their customers’ best interests at heart.

It does not mean that banks or loan providers are sinister.

But to gain maximum profit, banks offer products that meet their needs and attempt to cross-sell and upsell different products that your church would not need.

Therefore, even when you feel like you are in safe hands, you should continue being skeptical and cautious by following your due diligence and getting additional advice from people in your congregation.

Expectation 5: Interest Payments Are Fixed

You might expect that the rate is fixed.

Whether the market rate increases or decreases, your rate will remain what it was at the time of finalizing the contract.


Rates are rarely ever fixed for the full term of the loan.

While we have mentioned rates change over time, it must be mentioned that rates can be adjusted to favor the borrower in certain market conditions. 

If a church borrows money, and then the interest rates decrease, a church can always consider the refinancing option. This means renegotiating the terms of the loan is always on the table.

Thus, even if the terms of the church loan are not favorable at first, you have a reason to be positive!

Expectation 6: A Holy Professional Relationship

Churches wish to become party to agreements that do good for the world. Hence, churches tend to see good in everyone and expect their interest payments will go for good and holy causes.


Banks only consider profits. Banks’ perceptions of good and evil do not always align with that of the church.

From investing in a casino and lottery-based ventures to alcohol-based establishments, banks have a diverse portfolio that they handle.

Before signing a deal with any bank, the church must ask these critical questions.

Will our interest payment be used to finance any gambling establishments?

Will the payments that we make be used to fund any political, social, or religious agendas?

This does not mean that a church should not do business with a lender that makes these types of loans, but when given multiple choices, they may wish to select the lender that does not lend to businesses that go against the values of the church.

Expectation 7: Beginner’s Luck

Many borrowers walk into a bank or meet a lender and expect their first purchase of a church will be based on luck.


Good luck and blessings require underlying hard work.

To get church loan funds at a low rate with good terms, visit multiple lenders or hire a professional consultant that specializes in brokering church loans.

This allows churches to have different options available.

Furthermore, an increased flow of information enables both parties, church (borrower) and bank (lender), to be on the same and fair terms.

Besides, considering multiple options before making any choice always leads to getting the best deal.

Expectation 8: Banks Know Everything!

As you read our guide and think of churches borrowing money, you might expect banks to know everything and to be the best guide.


Banks specialize in commercial and personal loans for the purchase of big-ticket luxury items. Their expertise is not necessarily in church building loans or church construction loans.

Hence, it is significant for churches to explore banks that have particular loans for ministries. And when we say explore, we really mean it!

The church will have to do more than just Google “Church loans near me” and get to action by diving into the debt market. They should hire a church loan broker that knows the business and lenders inside and out.

Expectation 9: Too Many Cooks Spoil the Broth

Many times, churches believe financial matters should be transparent but discussed with only selected trustworthy individuals.

Consequently, very few people are aware of the fine details and technicalities involved in the church loan contract.


While we also believe too many cooks spoil the broth and too many consultants could ruin a loan, too few cooks are equally – and sometimes – more devastating.

Finding the right church loan broker, architect, and attorney who understands church loans will help make the final project a huge success.  

Therefore, the reality is including more people, especially consultants and experts, will yield positive results.

Parting Thoughts

Church loan funds are daunting and complex.

They are often a church’s worst ordeal, given how much time, money, and sweat it requires.

However, every ounce of effort seems worth it when loans are sanctioned and obtained, and the church begins its expansion leading to a blooming congregation.

Therefore, essential ingredients are establishing ideal goals, keeping realistic expectations, building contingency plans, and implementing effective solutions for every hurdle.

Last but not least, trust God to help you on the way!

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